Minneapolis Fed President Neel Kashkari said at an event in Marquette, Michigan, “The real question is, when is inflation going to come down.”
He warned of the potential risks to banks should high inflation persist, necessitating an extended period of tight monetary policy and an inverted yield curve. Such a scenario, Kashkari cautioned, “creates real problems for banks of all sizes. We are very aware of that.”
However, he also offered a more positive outlook tied to market expectations of easing inflation. If inflation does indeed fall rapidly, Kashkari suggested that “one might imagine interest rates normalizing, the yield curve uninverting and then the pressure on banks and their deposit bases becomes much smaller.”
